Performance Measurements (KPI’s) are one of the most useful management tools available. Getting it right, is another matter. It’s easy to develop ways to measure performance but it’s harder to assess how those measures will drive Performance.
One way is to test the measrues. First, use some trial data to see what the results will be and how, if any, different measurement techniques affect the results. For instance compare using calendar months vs. rolling 30 day periods for averaging or using weighted averages rather than simple averages when rolling up a portfolio of measurement data.
In addition, never simply put consequences in effect immediately. Give your measurements some time, perhaps 6-12 months to establish a track record and develop a baseline before making the measures count. Remember, performance management is more about effective management than it is about penalties.